PRINCIPLES OF MACROECONOMICS (LL)W/ACC.
7th Edition
ISBN: 9781264088980
Author: Frank
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 4RQ
To determine
Explain the frequently-flyer coupon and the wasteful travel decision.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Jamal has a very flexible summer job. He works every day but is allowed to take a day off anytime he wants. His friend Don suggests they take off work on Tuesday to go to the amusement park. The admission charge for the amusement park is $15 per person, and it will cost them $5 each for gas and parking. Jamal loves amusement parks and a day at the park is worth $40 to him. However, Jamal also enjoys his job so much that he would actually be willing to pay $5 per day maximum to do it
a) If Jamal earns $10 if he works, what is the cost and benefit of going to the park? Should he go to the amusement park?
Suppose the National Football League (NFL) wants to make Super Bowl tickets affordable for more football fans. The league therefore sets
the price of a Super Bowl ticket below what is generally considered a fair market price. Suppose the price of a ticket for a regular seat at the
Super Bowl is set at just $500. People who have tickets, however, can turn resell them online for $2,500 each, or more. If there are no
transaction costs associated with online sales of Super Bowl tickets, the true cost to a fan of attending the Super Bowl is:
O at least $2,500.
O the monetary price paid to obtain the ticket.
at most $500.
$2,000 less than the opportunity cost of a ticket.
Suppose the National Football League (NFL) wants to make Super Bowl tickets affordable for more
football fans. The league therefore sets the price of a Super Bowl ticket below what is generally
considered a fair market price. Suppose the price of a ticket for a regular seat at the Super Bowl is set at
just $500. People who have tickets, however, can turn resell them online for $2,500 each, or more. If
there are no transaction costs associated with online sales of Super Bowl tickets, the true cost to a fan of
attending the Super Bowl is:
Chapter 1 Solutions
PRINCIPLES OF MACROECONOMICS (LL)W/ACC.
Knowledge Booster
Similar questions
- From California to New York, legislative bodies across the United States are considering eliminating or reducing the surcharges that banks impose on non customers, who make $14 million in withdrawals from other banks' ATM machines. On average, non customers earn a wage of $24 per hour and pay ATM fees of $3.00 per transaction. It is estimated that banks would be willing to maintain services for 6 million transactions at $1.00 per transaction, while non customers would attempt to conduct 22 million transactions at that price. Estimates suggest that, for every 1 million gap between the desired and available transactions, a typical customer will have to spend an extra minute traveling to another machine to withdraw cash. What would be the nonpecuniary cost of legislation that would place a $1.00 cap on the fees banks can charge for non customer transactions? Economic price?arrow_forwardFrom California to New York, legislative bodies across the United States are considering eliminating or reducing the surcharges that banks impose on noncustomers, who make $10 million in withdrawals from other banks’ ATM machines. On average, noncustomers earn a wage of $22 per hour and pay ATM fees of $3.00 per transaction. It is estimated that banks would be willing to maintain services for 6 million transactions at $1.25 per transaction, while noncustomers would attempt to conduct 21 million transactions at that price. Estimates suggest that, for every 1 million gap between the desired and available transactions, a typical consumer will have to spend an extra minute traveling to another machine to withdraw cash.Based on this information, what would be the nonpecuniary cost of legislation that would place a $1.25 cap on the fees banks can charge for noncustomer transactions?Instructions: Enter your responses rounded to the nearest penny (two decimal places).$ What would be the full…arrow_forwardPaolo lives in Philadelphia and operates a small company selling scooters. On average, he receives $712,000 per year from selling scooters. Out of this revenue from sales, he must pay the manufacturer a wholesale cost of $412,000. He also pays several utility companies, as well as his employees wages totaling $269,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $1,000 in rent. Assume there is no depreciation in the value of his property over the year. Further, if Paolo does not operate the scooter business, he can work as a nurse and earn a yearly salary of $21,000 with no additional monetary costs, and rent out his storefront at the $1,000 per year rate. There are no other costs faced by Paolo in running this scooter company. (Questions in images)arrow_forward
- From California to New York, legislative bodies across the United States are considering eliminating or reducing the surcharges that banks impose on noncustomers, who make $12 million in withdrawals from other banks’ ATM machines. On average, noncustomers earn a wage of $24 per hour and pay ATM fees of $3.00 per transaction. It is estimated that banks would be willing to maintain services for 5 million transactions at $1.25 per transaction, while noncustomers would attempt to conduct 19 million transactions at that price. Estimates suggest that, for every 1 million gap between the desired and available transactions, a typical consumer will have to spend an extra minute traveling to another machine to withdraw cash. Based on this information, use a graph to carefully illustrate the impact of legislation that would place a $1.25 cap on the fees banks can charge for noncustomer transactions.arrow_forwardFrom California to New York, legislative bodies across the United States are considering eliminating or reducing the surcharges that banks impose on noncustomers, who make $12 million in withdrawals from other banks' ATM machines. On average, noncustomers earn a wage of $22 per hour and pay ATM fees of $3.75 per transaction. It is estimated that banks would be willing to maintain services for 5 million transactions at $1.25 per transaction, while noncustomers would attempt to conduct 21 million transactions at that price. Estimates suggest that, for every 1 million gap between the desired and available transactions, a typical consumer will have to spend an extra minute traveling to another machine to withdraw cash. Based on this information, what would be the nonpecuniary cost of legislation that would place a $1.25 cap on the fees banks can charge for noncustomer transactions? Instructions: Enter your responses rounded to the nearest penny (two decimal places). %24 1.83 What would be…arrow_forwardFrom California to New York, legislative bodies across the United States are considering eliminating or reducing the surcharges that banks impose on noncustomers, who make $14 million in withdrawals from other banks’ ATM machines. On average, noncustomers earn a wage of $22 per hour and pay ATM fees of $2.75 per transaction. It is estimated that banks would be willing to maintain services for 6 million transactions at $1.25 per transaction, while noncustomers would attempt to conduct 18 million transactions at that price. Estimates suggest that, for every 1 million gap between the desired and available transactions, a typical consumer will have to spend an extra minute traveling to another machine to withdraw cash.Based on this information, what would be the nonpecuniary cost of legislation that would place a $1.25 cap on the fees banks can charge for noncustomer transactions?Instructions: Enter your responses rounded to the nearest penny (two decimal places).arrow_forward
- Suppose you buy an accessory that will be used in your production activity and is worth a thousand of pesos (P1,000.00). In economic perspective, would you contend that is the only cost involved? Why or why not?arrow_forwardSam lives in San Diego and operates a small company selling bikes. On average, he receives $694,000 per year from selling bikes. Out of this revenue from sales, he must pay the manufacturer a wholesale cost of $392,000. He also pays several utility companies, as well as his employees wages totaling $289,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $2,000 in rent. Assume there is no depreciation in the value of his property over the year. Further, if Sam does not operate the bike business, he can work as a programmer and earn a yearly salary of $20,000 with no additional monetary costs, and rent out his storefront at the $2,000 per year rate. There are no other costs faced by Sam in running this bike company. Identify each of Sam’s costs in the following table as either an implicit cost or an explicit cost of selling bikes. Implicit Cost Explicit Cost The wages that Sam pays The…arrow_forwardSuppose that Ciana is deciding whether or not to buy a pair of sneakers that she has been researching online, and also the best place to make her purchase. Three different stores in the area sell the sneakers she likes, but some stores are more convenient for Ciana to reach than others. One option is her local shoe store located only 15 minutes away from where she works, where they charge a marked-up price of $124 for the sneakers: Store Travel Time Each Way Price of a Sneakers (Minutes) (Dollars per sneakers) Local Shoe Store 15 124 Different Neighborhood in Town 30 103 Rural Outlet 60 70 Ciana earns an hourly wage of $30 at her job. In order to purchase her sneakers she will have to take time off work, so each hour away from her job costs her $30 in lost income. Assume that Ciana’s travel time is the same each way (to and from the store) and that it will take her 30 minutes once she reaches a store to complete her shopping. Assume throughout the question…arrow_forward
- From California to New York, legislative bodies across the United States are considering eliminating or reducing the surcharges that banks impose on noncustomers, who make $14 million in withdrawals from other banks’ ATM machines. On average, noncustomers earn a wage of $20 per hour and pay ATM fees of $2.75 per transaction. It is estimated that banks would be willing to maintain services for 5 million transactions at $1.00 per transaction, while noncustomers would attempt to conduct 19 million transactions at that price. Estimates suggest that, for every 1 million gap between the desired and available transactions, a typical consumer will have to spend an extra minute traveling to another machine to withdraw cash.a. Based on this information, what would be the nonpecuniary cost of legislation that would place a $1.00 cap on the fees banks can charge for noncustomer transactions?b. What would be the full economic price of this legislation?arrow_forwardIn early 2008, you purchased and remodeled a 120-room hotel to handle the increased number of conventions coming to town. By mid-2008, it became apparent that the recession would kill the demand for conventions. Now, you forecast that you will be able to sell only 10,000 room-nights, which cost $80 per room per night to service. You spent $25.00 million on the hotel in 2008, and your cost of capital is 10%. The current going price to sell the hotel is $20 million. If the estimated demand is 10,000 room-nights, the break-even price is:__?____per room, per night. (Hint: Remember that the cost of capital is the opportunity cost, or true cost, of making an investment.)arrow_forwardOver the past decade, holiday gift cards have become increasingly popular at online retailers. Not long ago, online shoppers had to really hunt at most e-retailers’ sites to purchase a gift certificate, but today it is easier to purchase gift cards online than at traditional retail outlets. Do you think online gift cards are merely a fad? Explain carefully. (LO6)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education